Parlux shareholder lambasts Perry Ellis deal
Nussdorf, who has a 10.5 per cent stake in the company, has made
his point clear that he believes the proposed sale of the Perry
Ellis license agreement is 'not in the best interests of the
company'.
Nussdorf, who together with his brother Stephen Nussdorf, owns 37 per cent of E Com Ventures and together with their sister Arlene Nussdorf, control Model Reorg - companies that do significant business with Parlux - is urging executive board members to reconsider the deal.
The deal would leave Victory International open to buy the licensing rights for Perry Ellis fragrances for $140m. Nussdorf says the current proposed financing of the deal are not adequater, with the specified repayment terms and necessary financing not adequately specified.
He also brings to attention discrepancies over the license terms, which he says do not allow for a transaction of this nature without the consent of the licensor - the owners of the Perry Ellis brand.
Finally, he also points out that, as Perry Ellis has proved to be the company's principal asset, its sale should require approval of the company's stockholders.
Having generated $77m in revenues last year, Perry Ellis is the company's biggest selling brand, accounting for 42.5 per cent of total sales in 2005.
"I again urge the Board to proceed prudently, deliberately and in accordance with law in considering the proposed transaction," Nussdorf said in the open letter. "If the Board or management take any action that is detrimental to thecCompany or inconsistent with the best of interests of stockholders, we intend to take all actions necessary to hold each director or executive officer accountable and personally liable."
Nussdorf ends the letter by proposing a meeting of the board of directors at their earliest convenience.
The news comes as the latest in a string of incidences that have set Parlux on a rocky path that has sent the company's share prices into free fall. Currently shares are trading at an average of $5 per share, down from a high of $19 in March.
If Parlux goes ahead with the sale of Perry Ellis, the emphasis is expected to shift to some of the smaller brands, although the company's flagship Paris Hilton brand is not believed to be up for sale as it is considered to still have plenty of potential for future growth.
Last year it was growth in the sale of Paris Hilton fragrances and branded designer goods that helped the company's sales turnover to more than double from $47.44m in 2004, to reach $111.77m in 2005.
However, sales have slowed considerably recently, with the company blaming slowing retail activity in the US market for a downturn in the most recent quarter.
Parlux, is the license holder to big fragrance names such as XOXO, Ocean Pacific and tennis star Andy Roddick, and really hit the big-time by licensing deal to produce fragrances and asscessories using the name and image of media figure and heiress Paris Hilton.
